DP16360 The Efficacy of Tournaments for Non-Routine Team Tasks

Author(s): Florian Englmaier, Stefan Grimm, Dominik Grothe, David Schindler, Simeon Schudy
Publication Date: July 2021
Keyword(s): exploration, identity, image concerns, incentives, Innovation, natural field experiment, Rankings, team work, tournaments
JEL(s): C93, D90, J24, J33, M52
Programme Areas: Organizational Economics
Link to this Page: cepr.org/active/publications/discussion_papers/dp.php?dpno=16360

Tournaments are often used to improve performance in innovation contexts. Tournaments provide monetary incentives but also render teams' identity and social-image concerns salient. We study the effects of tournaments on team performance in a non-routine task and identify the importance of these behavioral aspects. In a natural field experiment (n > 1,700 participants), we vary the salience of team identity, social-image concerns, and whether teams face monetary incentives. Increased salience of team identity does not improve performance. Social-image motivates mainly the top-performing teams. Additional monetary incentives improve all teams' outcomes without crowding out teams' willingness to explore or perform similar tasks again.